“We ran very hard after the consumer business,” says Mr. Marks, who adds that the restructuring of the last three years was an extremely difficult time for Flextronics: “Our net employment went up, but we had to let 10,000 people go. Our business shifted away from the U.S. and western Europe. The growth was in Asia, eastern Europe, and Mexico.”
Today, Flextronics is reaping the benefits of that restructuring. Its lead over competitors looks likely to grow: 2005 revenue should rise 22 percent, surpassing $20 billion for the first time, while profits could rise 40 percent or more, according to Lehman Brothers, as Flextronics benefits from the continuing technology recovery and the growing efficiency of its lean production model.
But perhaps the ultimate validation of Flextronics’ strategy is the fact that it is provoking a larger transformation of the entire EMS industry. A few years ago, competitors scoffed at Mr. Marks’s unconventional strategic moves. Now most of them are imitating those moves — clambering to make their companies more vertically integrated, to develop their own global footprints, and to move further into product design.
Reprint No. 04408
Jeff Ferry ([email protected]) was the director of strategic communications for Nortel Networks and vice president of marketing for optical networking startup Yafo Networks. His book, The British Renaissance: How Six British Companies Are Conquering the World (William Heinemann, London, 1993), looked at world-class British manufacturing companies.